At a House Ways and Means Committee trade hearing last week, Congressman Adrian Smith (R-NE) said this:
Many countries, especially China, ... engage in predatory, unfair, and anti-free market behavior outside the scope of the WTO rules.
While the rules could of course be tightened, it's important to note that there are, in fact, rules here. For example, the WTO's subsidy rules prohibit certain subsidies and also provide for actions against subsidies that cause "adverse effects to the interests of other Members, i.e.: (a) injury to the domestic industry of another Member; (b) nullification or impairment of benefits accruing directly or indirectly to other Members under GATT 1994 in particular the benefits of concessions bound under Article II of GATT 1994; (c) serious prejudice to the interests of another Member."
In addition, as set out in para. 46 of the working party report on China's accession, China has made broad commitments in relation to the behavior of its state-owned and state-investment companies:
The representative of China further confirmed that China would ensure that all state-owned and state-invested enterprises would make purchases and sales based solely on commercial considerations, e.g., price, quality, marketability and availability, and that the enterprises of other WTO Members would have an adequate opportunity to compete for sales to and purchases from these enterprises on non-discriminatory terms and conditions. In addition, the Government of China would not influence, directly or indirectly, commercial decisions on the part of state-owned or state-invested enterprises, including on the quantity, value or country of origin of any goods purchased or sold, except in a manner consistent with the WTO Agreement. ...
Along the same lines as the Smith comment, I'll also note this statement from the testimony of former U.S. government trade official Kelly Ann Shaw during the hearing:
WTO rules, which were negotiated during the last century, do not address China’s industrial subsidies or the role of state capitalism or state-owned enterprises ...
Do the rules noted above not address the issues with China's practices sufficiently? How do people see the gaps, and what new rules would they want to see added? If certain Chinese behavior is thought to be outside the scope of the rules, this seems like a useful conversation to have.
